Snowy 2.0 blows out by more than $3m a day. Will it ever be worth it?

Deep under the Snowy Mountains, tunnelling machines have pierced through a key stretch of rock, edging Australia's most expensive energy project one step closer to completion.

The way is now cleared for work to begin on the Snowy 2.0 power station itself.

But questions remain about whether it will ever justify its cost.

The project in the NSW Kosciuszko National Park is seven years behind schedule, and its initial budget of $2 billion looks quaint in hindsight.

Based on Snowy Hydro's most recent costings of $12 billion, the project has blown out by around $3 million a day.

The government-owned energy company has admitted the final price tag will be much higher.

Snowy 2.0 has also faced scrutiny over ongoing safety issues and the revelation that executives collected more than $1.2 million in bonuses despite missing financial targets.

In May, Snowy Hydro chief executive Dennis Barnes acknowledged the project's difficulties but stood by its importance.

Dennis Barnes says the unprecedented scale and complexity of Snowy 2.0 have contributed to the project's rising costs. (ABC South East NSW: Isla Evans)

"Like most mega-projects in Australia and globally, Snowy 2.0's cost has increased; Snowy 2.0's scale and uniqueness have compounded the increase," he said.

Australia's most ambitious renewable energy project is slowly nearing completion. (ABC South East NSW: Floss Adams)

Snowy 2.0 was announced in 2017 by former prime minister Malcolm Turnbull.

It is an expansion of the Snowy Mountains hydro-electric scheme that was completed in 1974 at a cost of $820 million. Adjusting for inflation, that figure would be more than $8.5 billion today.

Snowy 2.0 is expected to be completed by the end of 2028. (ABC South East NSW: Isla Evans)

The project will connect two existing reservoirs at Tantangara and Talbingo via a 27-kilometre underground tunnel system and act like a giant battery.

Excess wind and solar energy will be used to power reversible turbines that will pump water from Talbingo via a hydro-electric power station 800 metres underground to the higher-elevation reservoir at Tantangara.

When demand surges, water will then be released back down the hill, generating electricity.

Upon completion, the pumped hydro power station will produce 2.2 gigawatts of power at full capacity, which Snowy Hydro claims is enough to power 3 million homes for a week.

Electricity will be generated at a hydro-electric power station being constructed about 800 metres underground. (ABC South East NSW: Isla Evans)

Just months after the project was announced, a feasibilit